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September 16, 2013 — The California Department of Food & Agriculture (CDFA) held its hearing, Sept. 12, on a proposal to adjust the Class 4b minimum pay price and whey factor. As detailed previously in DairyBusiness Update, the proposal provides a temporary 46¢/cwt. increase in the price of Class 4b milk and an increase in the cap of the whey value from 75¢ to $1/cwt. of milk.

According to California Milk Producer Council’s Rob Vandenheuvel, CDFA Secretary Karen Ross has 62 days from the hearing to rule on the proposal. However, she also has to announce any changes 10 days before implementing them, so the effective deadline is 52 days from the close of the hearing if there will be any formula change.

From a practical standpoint, Vandenheuvel said, CDFA has tried to avoid mid-month changes and implement formula changes on the start of a month. If that practice continues, an announcement is likely around Oct. 21, impacting milk sales after Nov. 1. According to the CDFA price announcement schedule, September Class 4b prices will be announced Oct. 1; October 4b prices are scheduled to be announced on Nov. 1.

One side note: The California Senate amended AB 1038 on Sept. 11. As amended, that bill sets maximum funding of $500,000 for the California Dairy Future Task Force, previously established by CDFA, and charged with evaluating and making recommendations on various issues relating to California dairy policies and programs.

Three major California dairy cooperatives will hold four meetings to discuss the possible formation of a federal milk marketing order (FMMO). The meetings are open to members of California Dairies, Inc. (CDI), Dairy Farmers of America, Inc. (DFA) and Land O’Lakes (LOL) only, and not open to the public or media.

The three co-ops – which combine to produce about 80% of California’s milk – commissioned a study last winter to see if the state’s dairy producers should join the FMMO system as a means to improve milk prices. The findings of a five-month study – conducted by Dr. Mark Stephenson, University of Wisconsin-Madison, and Dr. Chuck Nicholson, Penn State University – indicated a properly written FMMO for California would benefit the state’s dairy families by providing a regulatory structure potentially resulting in higher producer milk prices.